WE THE PEOPLE

Reform doesn't cut it!

Herman Cain was a 2012 Republican candidate for president. He is a former corporate executive and CEO, and held a position in the board of directors of the Federal Reserve Bank of Kansas City. Cain established Cain's Solutions Revolution, an organization whose mission is to educate the public and advocate for the policy solutions that drove his campaign.

One of the worst tendencies of Washington politicians is to purportedly “fix” big problems with small solutions.

Who can forget members of Congress, announcing at the conclusion of last year’s debt-ceiling showdown that they had agreed to a deal that would reduce the deficit by $1 trillion over 10 years? When you consider that the forecast deficit for that same period is well over $10 trillion – and even that’s assuming the phony “out year” spending cuts that never actually happen – a reduction of $1 trillion is not much of an achievement.

That’s because Washington doesn’t solve problems. It tweaks things – calling this “reform” – when these things need to be completely replaced and restructured.

If you want to understand why Washington does this, consider the reactions to Rep. Paul Ryan’s proposed entitlement restructuring, or to Gov. Scott Walker’s changes in the collective bargaining rights of public employees in Wisconsin. Democrats aired TV commercials depicting Ryan dumping a wheelchair-bound old woman over a cliff. Unions have successfully forced Walker into a recall election.

Most politicians, regardless of party, don’t want to deal with that kind of political blow-back. So they settle for weak half-measures that allow them to say they “did something,” even though the actions taken don’t really solve anything.

This, I fear, is what will happen with all three entitlement programs. Politicians will tweak the programs and claim they have “reformed” them, when they really haven’t done anything to prevent the long-term fiscal train wreck that’s coming. It isn’t enough simply to tinker with the benefit formulas or to adjust the way revenue is raised. Social Security was created 80 years ago. Medicare and Medicaid were created nearly 50 years ago. The world was a different place back then, and basic facts of life that might have applied in those days are not necessarily applicable today. It makes no sense to cling to old models, and yet the very same people who cry “Forward!” in their quest for re-election insist on clinging to these models of the past.

America needs to stop thinking in terms of reform, an all-purpose term that is too easily applied to meaningless gestures, and start thinking in terms of replacing and restructuring outdated programs and processes that simply cannot be salvaged.

I said during my campaign, and I still say today, that America should look to the Chilean counterpart of Social Security, which relies much more heavily on private accounts and gets better results without putting the country in fiscal jeopardy. Yes, this is a very different kind of idea. There’s nothing wrong with that. When President George W. Bush proposed in 2005 that we go to partial privatization of Social Security, you would have thought from the reaction in Washington that he’d proposed to make seniors eat dog food for the rest of their days.

In fact, Bush’s proposal represented a good start but didn’t go nearly far enough. Yet the change-averse culture of Washington had an absolute meltdown over even such a limited reform as this. That’s pretty ironic considering how many of these same people get elected and re-elected squawking about “change blah, blah, blah.” Apparently change is a great idea as long as you don’t actually try it.

Now let’s be honest. It’s not only in Washington where people deny the need to replace and restructure models that don’t work anymore. Kodak was once the king of the photography industry, but they refused to accept that digital technology was about to revolutionize the industry, and they didn’t get out in front of the change. Once they got so far behind that they couldn’t catch up, they ended up in bankruptcy.

The newspaper industry has suffered in much the same way. Forward-looking people were predicting nearly 20 years ago that the way people get their news would change dramatically as a result of technology. Most of the newspaper industry refused to believe it would happen. Many newspapers invested in shiny new printing presses as recently as seven or eight years ago – thinking it would save them to have the color photos “pop” better on the printed page. Now they’re trying to lease out capacity on those printing presses to coupon companies while they desperately seek to catch up on their digital media strategies.

In both cases, it was a combination of short-sightedness and arrogance. People thought their models would always work because they always had worked. Why would that change? But of course, business models become antiquated over time, and so do government programs. It’s not enough just to change them. You need to completely replace the old model with a new one.

If America is to deal with the challenges we face, we need to change our mindset. Mere “reform” of outdated, antiquated models won’t get the job done. When Social Security was created, it was unheard of for people to have televisions in their homes. When Medicare and Medicaid were created, only super-rich people had color TVs. These programs are relics of another time, and yet we act as if they are sacrosanct and must be kept in their original form forever – even though the numbers clearly tell us they are going to bankrupt the country.

That makes no sense. America has never been a timid nation, so why are we so afraid of accepting anything other than timid “reforms” when what we really need is to restructure, and replace old models that no longer make sense with no models that work and fit the times?

Forget reform. Replace and restructure! If we do not begin to seriously replace and restructure the tax code, government programs and regulations, then there will be nothing left to reform but a bankrupt nation.

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